Citation NR: 9724213
Decision Date: 07/14/97 Archive Date: 07/21/97
DOCKET NO. 95-13 572 ) DATE
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On appeal from the
Committee on Waivers and Compromises of the
Department of Veterans Affairs Regional Office in St.
Petersburg, Florida
THE ISSUE
Entitlement to waiver of recovery of an $812 debt stemming
from the overpayment of Section 306 pension benefits.
REPRESENTATION
Appellant represented by: Veterans of Foreign Wars of
the United States
ATTORNEY FOR THE BOARD
David Wulf, Associate Counsel
INTRODUCTION
The veteran served on active duty from August 1942 until
August 1945.
This appeal arises from a decision rendered in June 1994 by
the Committee on Waivers and Compromises (Committee) of the
St. Petersburg, Florida Regional Office (RO). By this
decision, the Committee declined to waive recovery of an $812
debt the veteran had accrued as a result of the Department of
Veterans Affairs’ (VA’s) overpayment of Section 306 pension
benefits to him. In rendering its decision, the Committee
declared that, in failing to report in a more timely fashion
that his net worth was in excess of $100,000, the veteran,
though not having acted in bad faith, had nonetheless induced
VA to pay out benefits to which he had not been entitled.
The Committee noted that, therefore, the veteran was at fault
for the creation of his debt. The Committee noted further
that to require the veteran to repay his debt would not, in
view of his financial circumstances, “...work an unreasonable
hardship upon the veteran or be contrary to equity and good
conscience.”
In September 1996, the Board of Veterans’ Appeals (Board)
remanded the veteran’s claim. In so doing, the Board noted
that the veteran had indicated that, because his wife had
recently been diagnosed with Alzheimer’s Disease, the
couple’s medical expenses might soon increase dramatically.
The Board instructed that, therefore, the Committee should
obtain from the veteran updated financial information prior
to readjudicating his request for waiver.
Upon receiving additional financial information, the
Committee, by a supplemental statement of the case issued in
March 1997, again denied the veteran’s request for waiver.
The Committee noted that, although the veteran’s updated
financial status report showed him to have a negative monthly
cash flow of $3,247.85 (owing largely to $2,680 in monthly
“caregiver” expenses reported by the veteran), it also showed
him to have assets totaling $186,438,80. The Committee noted
further that the veteran’s financial status report failed to
show interest income and that the bank statements and other
documents he had submitted did not evidence his payment of
the reported $2,680 in monthly “caregiver” expenses.
Finally, the Committee noted that the veteran is no longer
burdened by a monthly rent or mortgage payment.
CONTENTIONS OF APPELLANT ON APPEAL
The veteran contends that, due largely to the cost associated
with providing 24-hour-per-day nursing care for his wife, his
monthly expenses exceed his monthly income by $3,247.85 and
that, therefore, it would, indeed, contravene notions of
equity and good conscience to require him to repay his debt.
In this regard, the veteran has indicated that the monthly
cost of his wife’s nursing care is $2,680 and that he pays
this amount, in its entirety, from his private funds. The
veteran has indicated also that, when his wife was diagnosed
with Alzheimer’s Disease, he sold their farm and “invested
the profits [from such sale] less the cost of [their] current
home....” He indicated that the “interest [he] receive[s]
plus [his] monthly Social Security benefits do not cover
[his] monthly living expense[s].”
DECISION OF THE BOARD
The Board, in accordance with the provisions of 38 U.S.C.A.
§ 7104 (West 1991 and Supp. 1996), has reviewed and
considered all of the evidence and material of record in the
veteran's claims file. Based on its review of the relevant
evidence in this matter, and for the following reasons and
bases, it is the decision of the Board that the preponderance
of the evidence is against granting a waiver of recovery of
the veteran’s debt.
FINDINGS OF FACT
1. All evidence necessary for an equitable disposition of
the veteran’s claim has been developed.
2. The veteran’s failure to have provided, in a more timely
fashion, information concerning the extent of his net worth
did not constitute “fraud,” “misrepresentation of a material
fact,” “bad faith,” or “lack of good faith.”
3. It is not contrary to the principles of equity and good
conscience to require the veteran to repay his debt.
CONCLUSION OF LAW
Waiver of recovery of the veteran’s $812 debt is denied.
38 U.S.C.A. § 5302(a) (West 1991 and Supp. 1997); 38 C.F.R.
§§ 1.962, 1.963, 1.965 (1996).
REASONS AND BASES FOR FINDINGS AND CONCLUSION
Initially, the Board finds the veteran’s claim to be well
grounded within the meaning of 38 U.S.C.A. § 5107 (West 1991
and Supp. 1997). As to another preliminary matter, the
veteran has not indicated that there exist any records of
probative value that are available and that have not already
been included in his claims folder. Accordingly, the Board
finds that all relevant evidence has been properly developed
and that the duty to assist the veteran in developing
pertinent facts, as set forth by 38 U.S.C.A. § 5107(a), has
been satisfied.
Before proceeding to discuss the merits of the veteran’s
appeal, it may be useful to address briefly certain of the
laws and regulations that govern the adjudication of requests
for waiver of the recovery of overpayments. In this regard,
the Board notes that the provisions of 38 U.S.C.A. § 5302(c)
(West 1991 and Supp. 1997) prohibit the waiver of a debt
where “...there exists in connection with the claim for such
waiver an indication of fraud, misrepresentation, or bad
faith on the part of the person or persons having an interest
in obtaining a waiver....” Similarly, 38 C.F.R. § 1.965(b)
(1996) provides that the granting of a waiver will be
precluded upon a finding of “(1) fraud or misrepresentation
of a material fact, (2) bad faith, or (3) lack of good
faith.” A debtor’s conduct is deemed to constitute “...bad
faith if such conduct, although not undertaken with actual
fraudulent intent, is undertaken with intent to seek an
unfair advantage, with knowledge of the likely consequences,
and results in a loss to the government.” A debtor exhibits
“lack of good faith” where his conduct shows an “...[a]bsence
of an honest intention to abstain from taking unfair
advantage of the...Government.” The Board also notes that,
pursuant to 38 C.F.R. § 1.962(b), any “misrepresentation of a
material fact” must be “more than non-willful or mere
inadvertence.”
If a debtor’s conduct is deemed not to have constituted
either “fraud,” “misrepresentation of a material fact,” “bad
faith,” or “lack of good faith,” such debtor’s request for
waiver will be evaluated in light of the principles of
“equity and good conscience” which are set forth at 38 C.F.R.
§ 1.965(a) (1996). In applying the “equity and good
conscience” standard to an individual case, several factors
are to be considered by the decision-maker. Among these are
(1) whether actions of the debtor contributed to the creation
of the debt, (2) whether collection would deprive the debtor
or the debtor’s family of basic necessities, (3) whether
recovery of the debt would nullify the objective for which
benefits were intended, (4) whether failure to make
restitution would result in unfair gain to the debtor, and
(5) whether the debtor has changed position to his detriment
due to his reliance upon the receipt of VA benefits.
Additionally, the decision-maker must conduct a “balancing of
faults,” weighing the fault of the debtor against any fault
attributable to VA.
The instant question, of course, is whether, in view of the
legal and regulatory guidelines set forth above, the veteran
is entitled to a waiver of his debt. In this regard, the
Committee has held that, although the veteran’s failure to
provide timely information concerning the extent of his net
worth did not constitute bad faith, the veteran was
nonetheless at fault for the creation of his debt. The
Committee determined that, therefore, and because repayment
of his debt would not impair the veteran’s ability to provide
his family with the basic necessities of life, waiver could
not be granted. For his part, the veteran has claimed that,
in view of the expenses associated with his wife’s nursing
care, it goes against equity and good conscience to deny his
request for waiver.
On the Financial Status Report he submitted in January 1997,
the veteran has indicated having $947 per month in income
(all of it from social security benefits) and $4,195 in
monthly expenses (including $2,680 per month for his wife’s
“caregiver”), making for a negative monthly balance of
$3,247. The veteran has not reported having any interest
income; however, bank statements and a statement of his
investment portfolio reflect that he received interest and/or
dividends of more than $4,700 during 1996. This interest and
dividend income would lower his reported monthly deficit by
nearly $400. Additionally, the veteran has reported having
assets valued at $186,438.80, including $17,000 in U.S.
Savings Bonds, $61,452 in stocks and other bonds, $9,843 in
bank accounts, real estate valued at $85,943, 40 acres of
undeveloped land worth $8,200, and an automobile valued at
$4,000.
Conceding that the veteran may have a negative monthly
balance of approximately $2,850 ($3,247 reported by the
veteran minus nearly $400 for interest/dividend income), the
Board notes that certain of his expenses (although not the
$2,680 per month for 24-hour-a-day nursing care) might be cut
back with little difficulty. For example, the expenses for
lawn care, pest control and insurance go well beyond that
which may fairly be deemed “basic necessities.” Nonetheless,
even assuming that the veteran’s spending will continue at
its current level, the veteran’s assets are of such magnitude
as to allow him both to repay his indebtedness to VA and to
defray his large monthly financial shortfall for some years
to come. Were additional restraint to be exercised, the
veteran and his wife (each of whom is approximately 75 years
old) might be expected to use their assets to defray their
expenses for several years longer. Thus, and because the
veteran’s failure to have provided timely notice of the
extent of his net worth constituted the underlying cause of
the creation of his debt, to grant a waiver of recovery of
such debt would, indeed, be to confer an unfair gain upon the
veteran. This being the case, it does not go against equity
and good conscience to deny the veteran’s request for waiver.
ORDER
A waiver of overpayment is denied.
NANCY I. PHILLIPS
Member, Board of Veterans' Appeals
38 U.S.C.A. § 7102 (West Supp. 1996) permits a proceeding
instituted before the Board to be assigned to an individual
member of the Board for a determination. This proceeding has
been assigned to an individual member of the Board.
NOTICE OF APPELLATE RIGHTS: Under 38 U.S.C.A. § 7266 (West
1991 and Supp. 1996), a decision of the Board of Veterans'
Appeals granting less than the complete benefit, or benefits,
sought on appeal is appealable to the United States Court of
Veterans Appeals within 120 days from the date of mailing of
notice of the decision, provided that a Notice of
Disagreement concerning an issue which was before the Board
was filed with the agency of original jurisdiction on or
after November 18, 1988. Veterans' Judicial Review Act,
Pub. L. No. 100-687, § 402, 102 Stat. 4105, 4122 (1988). The
date appearing on the face of this decision constitutes the
date of mailing and the copy of this decision which you have
received is your notice of the action taken on your appeal by
the Board of Veterans' Appeals.
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